By an OGJ correspondent
NICOSIA, Mar. 28 -- Talisman Energy Inc., Calgary, has completed the long-awaited sale of its 25% stake in Sudan's Greater Nile Oil Project (GNOP) to New Delhi-based ONGC Videsh Ltd (OVL), the overseas arm of India's state-owned Oil & Natural Gas Corp. (ONGC).
The Indian stake will be held by an Amsterdam-based subsidiary, ONGC Nile Ganga BV. ABN Amro, the only Dutch bank operating in India, has been appointed as advisor to ONGC Nile Ganga.
Talisman announced last October its intention to sell, saying it expected the transaction to be completed by the end of 2002. But the deal was blocked by Talisman's partners in GNOP, which had right of first refusal over any sale (OGJ Online, Mar. 11, 2003).
Apart from Talisman (operator, 25%), equity owners in the 250,000 b/d GNOP are China National Petroleum Corp. 40%, Malaysia's state oil company Petronas Carigali Overseas Sdn Bhd.(Petronas) 30%, and Sudan's national petroleum company Sudapet Ltd. (5%).
Partners vie for GNOP stake
Industry sources told OGJ that CNPC and Petronas each wanted to increase their equity stakes in GNOP, but that the Sudanese government had objected. CNPC eventually dropped its demands altogether, while Petronas did so only after being offered another asset instead.
Talisman said it completed the sale of its indirectly held interest in GNOP to OVL for an aggregate amount of $771 million subject to what it called "post-closing adjustments."
"Under the transaction, an indirect wholly owned subsidiary of Talisman sold and assigned to OVL all of the shares of Talisman (Greater Nile) BV (TGN BV), as well as the debt owed by TGN BV to the subsidiary," Talisman explained.
According to Talisman's Oct. 30, 2002, announcement of the sale, OVL was entitled to receive the benefit of all free cash flow from TGN BV's interest in GNOP commencing Sept. 1, 2002, as well as associated working capital.
"Talisman's subsidiary has received approximately $84 million from TGN BV since Aug. 31, 2002, and consequently, closing cash proceeds were approximately $687 million," the firm said.
Sale marks end of era
Talisman's transaction with OVL marks the ends of an era for the Canadian firm.
Talisman acquired its operatorship and 25% interest in GNOP in October 1998 through the acquisition of Arakis Energy Corp. for about 8.9 million common shares of Talisman (OGJ, Oct. 19, 1998, p. 44).
Talisman's acquisition provided an infusion of capital that enabled the consortium to complete a 930 mile pipeline to transport oil from fields in southern Sudan to an export terminal near Port Sudan on the Red Sea.
The pipeline began filling with crude in July 1999, and the first cargo of "Nile Blend" departed the export terminal in early September 1999. Originally constructed to move 150,000 b/d of oil, the pipeline has a current capacity of 250,000 b/d and can be expanded to 450,000 b/d.
But Sudan also marked a troublesome time for Talisman, best summed up by President and CEO Jim Buckee when he announced the sale last year: "Talisman's shares have continued to be discounted based on perceived political risk in-country and in North America to a degree that was unacceptable for 12% of our production. Shareholders have told me they were tired of continually having to monitor and analyze events relating to Sudan" (OGJ Online, June 18, 2002).
Boon for OVL
For OVL, the deal means close to 60,000 b/d of additional production, and it expects to find a market for the oil in India, possibly with ONGC's Mangalore Refinery & Petrochemicals Ltd. (MRPL).
"Once the deal is formally approved by the Sudanese government, we are planning to bring the first possible shipment of our share of the medium sweet crude oil from the field to India," OVL Managing Director Atul Chandra said when the transaction was announced in October.
OVL's plans
Meanwhile, OVL has retained the services of Trafigura Ltd. of London to trade its share of GNOP crude oil on global markets.
"Trafigura Ltd has been given the mandate to trade for us for next 6 months by when we hope to put in place a mechanism of shipping the Sudan crude to India," an OVL spokesman said.
Industry sources told OGJ that Petronas, for dropping its objections to the Talisman sale, was offered the opportunity of acquiring an altogether different asset in Sudan.
The day after Talisman's Mar. 12 announcement, Petronas International Corp. Ltd., a wholly owned Petronas subsidiary, announced that it had acquired Mobil Oil Sudan Ltd. from Mobil International Petroleum Corp.
Mobil Oil Sudan, a company incorporated in Sudan, is involved in the retailing and marketing of oil, motor fuels, jet and marine fuels, lubricants and other petroleum products in Sudan.
In addition to having a network of service stations throughout the country, the company also owns three petroleum depots—one each in Port Sudan, Khartoum, and Gaili.
In a statement, Petronas said its new acquisition would be renamed Petronas Marketing Sudan Ltd. and that it "would further pave the way for Petronas to add value to its activities in Sudan and strengthen its brand position."
The Malaysian firm said the acquisition signified "another long-term commitment to enhance its presence in Sudan."
